Base metals close mixed on the LME

BASE metals on the London Metal Exchange (LME) have closed mixed as prices within the complex showed signs of diverging.

Whereas LME three-month copper, the flagship of the base metals, on Wednesday continued to put in a lacklustre performance, closing 0.8 per cent lower on the day at $US6,616 per metric tonne, aluminium closed some 2.1 per cent higher from the previous session's settlement price, and nickel rose 1.5 per cent to $US16,690 per tonne.

"The bearish mood seems to be improving," said Newedge director of Asian commodities trading Richard Fu.

Copper fell as investors sold ahead of upcoming Chinese trade data due later in the week and before the minutes of the latest US monetary policy meeting were released later in the session.

A recovery for the red metal stalled last week, after China announced vague plans for an economic stimulus that disappointed investors.

The nation is the world's largest copper consumer, and a string of weak economic readings pushed copper prices to their lowest level in three-and-a-half years in March amid worries over sluggish demand.

Nickel prices continued their recent strength as the World Steel Association said global steel usage will increase by 3.1 per cent in 2014 and 3.3 per cent in 2015.

This could further tighten the supply-demand dynamics for nickel, which is used to make alloys such as steel. Nickel prices have rallied 19 per cent since January on the back of an Indonesian ore export ban.

Aluminium prices surged as major producer Alcoa said it expected the supply-demand dynamics of the aluminium market to tighten up.

"With the LME Warehouse exit queue issue dragging on, however, it is debateable to what extent bullish support for prices will be manifested in the underlying price rather than in physical premia," commented Standard Bank base metals analyst Leon Westgate.

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